Corzine, Christie Spar Over Income Taxes

With their race coming down to the wire, the candidates in New Jersey’s gubernatorial contest are attacking each other as ferociously as ever.

A TV ad from Republican Chris Christie accuses Democratic Gov. Jon Corzine of not paying state income taxes last year. Corzine’s campaign says the claim is an "outright lie." We find it to be true in a literal sense, but its implications are false.

The Christie ad says: "Last year, millionaire Corzine paid nothing, zero, in state income taxes. That’s outrageous." The source for the claim, according to the ad, is an Oct. 15 article from the Star-Ledger of Newark. We didn’t find an article from the paper on that date dealing with this subject, but we did find one from Oct. 16.

According to that article, Corzine, who only makes $1 a year as governor and relies on his investment portfolio for income, "did not pay income tax last year after reporting a $3.13 million loss [on his federal income tax return]" due to the downturn in the markets. The paper said that Corzine’s state tax returns, which it requested from the campaign, showed that Corzine actually earned $55,504 in 2008 and owed $1,520 in state income taxes. (New Jersey has rules for calculating losses that are different from the federal government’s.)

But what the paper also reported, and the Christie ad leaves out, is that the amount Corzine owed was "billed against prior credit from 2007." The credit was a result of Corzine overpaying his state income taxes in 2007, according to his campaign. So is it true that Corzine "paid nothing, zero, in state income taxes"? Yes. But Corzine’s not a tax deadbeat. He simply suffered huge financial losses that meant he owed nothing to the feds, and had overpaid his state taxes previously – so a credit erased his New Jersey debt. We doubt that most viewers, if they knew the facts, would find the situation "outrageous."

The Corzine campaign fired back with a TV ad saying that "Christie knows that Corzine paid every penny of taxes owed," and that Christie "admitted he didn’t pay his own taxes."

The ad is referring to a $46,000 personal loan that Christie, a former U.S. attorney for New Jersey, gave to Michele Brown, who worked as an assistant U.S. attorney, in 2007. Christie failed to report the loan on his tax returns and federal financial disclosure forms.

Christie told reporters he never thought of the loan, which carried a 5.5 percent yearly interest rate, "as an asset that was giving me income." And the amount received from the interest on the loan, Christie said, amounted to less than $3,000 between 2007 and 2008.

Christie has apologized for not reporting the loan and promised to amend his tax and financial disclosure forms. "It was certainly nothing that I was trying to conceal or hide," he said. So Corzine’s ad is literally true as well: Christie did admit that he didn’t pay taxes on interest he collected on the loan. But Corzine doesn’t mention that the sum Christie owed was small.

Election Day is Nov. 3, leaving just six days for New Jerseyans to make up their minds in this slugfest.